Airline CFOs: The new digital champion

Airline CFOs: The new digital champion

By John E. Luth

I hope you are enjoying this series of articles I am publishing on the evolving and expanding role of CFOs in leading transformation within their companies.  (If you haven’t read my first two blogs, please do so before reading this one.)  Let’s dig deeper into the CFO’s unique position to play a pivotal role in leading the digitalization effort.

A digitally powered pivot for the CFO

In Accenture’s research report “From the Bottom Line to the Front Line,” Dr. Christian Campagna, Managing Director, Accenture Strategy, CFO & Enterprise Value, says there is increased pressure on the CFO to become the “economic guardian” of the business.  “The CFO and the CEO are the only board members who have sight of, and responsibility for, the whole enterprise. Today, as transformation initiatives like analytics, big data, new business and operating models grow in importance, it’s time for the CFOs to step up and take even more responsibility.”

CFOs are using automation, and now increasingly “digitalization,” to usher in a new era of exploiting data sources to transform their firm’s performance.  Often CFOs are “leading by example” in terms of bringing automation, digitalization and artificial intelligence (AI) into their own finance organizations as a means of demonstrating to the broader organization the power of combining these initiatives.

The data capabilities CFOs develop can help them make decisions about investing in digital and technology across the enterprise based on economic value, which in turn empowers them to generate and combine even more useful data.

Empowering C-suite colleagues

For the reasons outlined above, Accenture found that CFOs believe that collaboration, new technologies and changing work practice, if implemented in a holistic fashion, will facilitate a revolutionary approach to old problems.  It’s all about empowering other groups within the enterprise through transfer of responsibility for routine finance functions and analyses within those groups.

My colleagues’ research showed that 67% of finance leaders believe they should train their fellow executives, starting in the C-suite, with taking on reporting, planning, budgeting and forecasting within their own functional areas.  Of the 700 finance executives surveyed, 78% believe that digitalization will significantly facilitate that transition to self-reliance by those non-finance groups.

Decentralizing control, planning & analytics

When CFOs provide tools, controls and expert support, the finance group empowers other departments to reduce cycle times and provide better customization of services while freeing up the finance group to focus on greater “added value” contributions, such as strategic planning.

When interviewed for the research, Bob McGee, ATB Financial’s CFO put it this way, “What finance is doing more of, is sitting side by side with the folks running the business as they face their different challenges truly understanding the tactical and strategic things they are working on and advising them on what will help them better achieve their short-term and long-term objectives.”

Yet, with all this emphasis on decentralization and empowerment, CFOs realize the finance group has a necessary and key role for each of the following critical tasks within a company:

  • Guiding successful adoption of emerging and evolving technologies (78% believed finance is better at this than other groups within their companies)
  • Managing cyber-related risk (76%)
  • Forecasting long-term value and/or lifespan of a specific technology (80%)
  • Combining different data sets (77%)
  • Effectively balancing investments in technology between core and new business (78%)

Change isn’t always easy

These initiatives and intentions are good, but many believe there is far more work to do. Accenture estimates that in most enterprises, only about 34% of finance tasks have been automated, and that figure is much lower in most airline groups.  This is an extraordinarily low percentage since the goal of technology is to enable a “lights-out” back office.

We estimate that between 60% and 80% of backward-looking accounting activity can be automated with very limited human intervention.  However, when we asked CFOs, they said less than 50% of such processes would be automated by 2021.  I know from my own work with airline finance groups that airlines tend to be laggards in adopting automation and likely will be trailing the broader averages.

Adopting robotics and AI can be a daunting task in most companies, and in particular in airline groups that tend to be heavily unionized or viewed by the host country as a national asset and job provider.  There are many challenges.  Our research showed that 38% of CFOs across all industries worry about employee resistance to working with non-human colleagues.

In my next blog, I will talk more about how CFOs can promote development of intelligent business services with a focal point on the human aspect – both employee and customer.

Exploring the future of the function

Explore the major themes influencing the shift in my blogs: